Friday, September 19, 2008

So let's see
if I've got this right. A bank can borrow ungodly amounts of money at
an interest rate rate below the rate of inflation, set by some set of
politically-appointed career hacks; it can practice fractional reserve
lending (loaning a staggering multiple of the money it holds on
deposit); it can leverage itself up 30-odd times; it can revalue the
'assets' it buys on a whim, using nothing but its own 'in house model'
(which is an Excel spreadsheet that uses Solver to find the value that
is required to boost earnings enough so that all the managerial staff
get bigger bonuses).

And when all of that chicanery comes undone, and Madame Market
comes to bite the arse of anyone stupid enough to still hold their
stocks, the banks cry poor and whine to government ... who nationalise
the failures, then pump a quarter of a trillion dollars
into financial markets in a week, and when that doesn't work they
promptly ban the short sale of financial stocks.

Are they serious? Do they seriously
think that the fall in bank stocks is due to short sellers? Come ON.

Nobody ever made money shorting the stock of a company that
was being run properly - Not even back in the Jesse Livermore days. The
idea that short-selling a stock can undermine a fundamentally-sound
enterprise is absolute hogwash. In fact, it is almost impossible to
make money shorting any instrument that has sound fundamentals (which
is why I have not shorted metals or energy futures since before the
year 2000).

The market is already hugely tilted against short selling -
you have to borrow the stock, pay interest as well as dividends, pay
additional exchange fees, and you can't sell except on an uptick.

And what's more, this will not stop short positions
in bank stocks: all that is required to construct a synthetic short in
a specific bank is to buy a put, or - to get big-time leverage - to
sell a call and buy a put.

So in other words, the UK and US government either
deliberately lined the pockets of option market makers, or displayed
once and for all that they have bugger-all understanding of financial
markets. My guess is the latter - and it also shows the extent to which
these career parasites are prepared to try and pervert the workings of
the market. Remind me again why we spent trillions on the Cold War?

I admit that a third option exists - that this was purely an
"announcement play"... the sort of thing that is done by the management
of unscrupulous brokerages when they have a large tranche to sell on
behalf of an institutional client: have an analyst write a glowing
research note indicating that a stock is on the verge of a big move up,
and sell the insto tranche to your own retail clients... and pocket
double the brokerage.

So what's going to happen when this little propaganda-driven
bump upwards doesn't work? Are they going to ban all
sales - make the stock market something that you have to buy for keeps?

Still, you ought never be surprised at the deplorable depths
to
which scum like Gordon Brown will sink. After all, this is the genius
who sold the UK government's gold at a 20-year low
in the price of gold: the decision has already cost the UK treasury
billions of dollars. As Brokeback-cowboy George the Turd might say,
Heckuva job, Brownie.

Little wonder he has had to leech from the public bloodstream
for his entire woebegone career: if his private decision-making is half
as woeful as the decisions he has made on behalf of the UK government,
he
must have been on the bones of his arse by his mid-teens.

So a bunch of short sellers closed positions yesterday arvo in
the US - driving the Dow up over 500 points between 1 p.m. and the
close - 400 of those points coming in the last 90 minutes. Healthy?
Don't you believe it.

I notice that nobody seeks to stop highly-leveraged long-side
speculation in housing or stocks... but leveraged long side speculation
in oil is on a par with membership in the fictional
"al-Qaeda" movement. When oil resumes its bull market, watch for nongs
like Gordon Brown to talk about banning speculative BUYING in oil
futures.

Major Market Indices

The broad market - the All Ordinaries (XAO)
- surged a whopping 188.8 points (4.06%), finishing at 4840.7 points.
The index hit an intraday high of 4856.6 at 11:57 am, while the low for
the day was 4651.9 - set at 10:00 am Sydney time. Banks were the big
gainers, as recent political events show that bankers will be protected
by the men who rape the paypackets of the masses and squander the
proceeds: in short, the bankers will be saved from their own stupidity,
even if it means beggaring the entire world.

Total volume traded on the ASX was 2.02bn units, 52% above its
10-day average. The ASX's daily listing of all stocks included 1355
different 3-letter FPO's which traded (i.e., had non-zero trade
volume). Of these, 785 issues rose, with volume in rising issues
totalling 1.48bn units; decliners numbered 291 counters, and between
them they traded aggregate declining volume of 410.6m shares.

Of the 490 All Ordinaries components, 323 rose while 107 fell.
Volume was tilted in favour of the gainers by a margin of 3.7:1, with
1.25bn shares traded in gainers while 337.35m shares traded in the
day's losers.

The Index that forms the cash basis for the SFE's Share Price
Index Futures - the S&P/ASX 200 (XJO)
- hurtled skyward to the tune of 196.8 points (4.27%), closing out the
session at 4804.1 points.

The "heavy hitters" of the Australian market - the ASX
20 Leaders (XTL)
- had a bit of a moonshot, stacking on 132.9 points (5.09%), closing
out the session at 2744.7 points. The 20 stocks
which make up the index traded a total of 263.1m units; 16 index
components rose, with rising volume amounting to 236.02m shares, while
the 4 decliners had volume traded totalling 27.07m units. The major
percentage gainers within the index were

Macquarie Group (MQG),
+$9.85 (37.81%) to $35.90 on volume of 22.5 million shares;

National Australia Bank (NAB),
+$3.40 (17.35%) to $23.00 on volume of 28.3 million shares;

ANZ Banking Group (ANZ),
+$2.26 (14.63%) to $17.71 on volume of 21.8 million shares;

AMP (AMP),
+$0.69 (10.94%) to $7.00 on volume of 11.9 million shares; and

Stockland (SGP),
+$0.53 (9.72%) to $5.98 on volume of 12.4 million shares.

On the less salubrious side of the big-cap fence, the
following stocks were the worst-performed within the index:

Foster's Group (FGL),
-$0.35 (6.11%) to $5.38 on volume of 15.5 million shares;

Woolworths (WOW),
-$0.71 (2.51%) to $27.53 on volume of 3.8 million shares;

Brambles (BXB),
-$0.06 (0.73%) to $8.11 on volume of 5.6 million shares; and

The ASX Small Ordinaries (XSO)
significantly underperformed its large-cap counterpart, but still
performed solidly, in moving up 47.6 points (1.86%), closing
out the session at 2604.6 points.

Among the stocks that make up the Small Caps index, 123 index
components finished to the upside, and of the rest, 54 closed lower for
the session.

The 194 stocks which make up the index traded a total of 513.45m units:
volume in the 123 gainers totalling 293.73m shares, with trade
totalling 180.26m units in the index's 54 declining components. The
major percentage gainers within the index were

Market Breadth

GICS Industry Indices

Among the 11 industry indices, 8 registered an advance for the
session, the remaining 3 lost ground.

The best performing index was Financials ex Property
Trusts (XXJ),
which added 436.9 points (9.79%) to 4899.9 points. The 30 stocks which
make up the index traded a total of 205.38m units; 25 index components
rose, with rising volume amounting to 186.64m shares, while the 3
decliners had volume traded totalling 9.29m units. The major percentage
gainers within the index were

Macquarie Group (MQG),
+$9.85 (37.81%) to $35.90 on volume of 22.5 million shares;

National Australia Bank (NAB),
+$3.40 (17.35%) to $23.00 on volume of 28.3 million shares;

Australia And New Zealand Banking Group (ANZ),
+$2.26 (14.63%) to $17.71 on volume of 21.8 million shares;

Bendigo and Adelaide Bank (BEN),
+$1.42 (13.5%) to $11.94 on volume of 2 million shares; and

Second in the index leadership stakes was Property
Trusts (XPJ),
which gained 96.9 points (7%) to 1481.7 points. The 21 stocks which
make up the index traded a total of 362.76m units; 15 index components
rose, with rising volume amounting to 254.53m shares, while the 6
decliners had volume traded totalling 108.23m units. The major
percentage gainers within the index were

Centro Retail (CER),
+$0.02 (20%) to $0.12 on volume of 27.2 million shares;

Goodman Group (GMG),
+$0.43 (17.77%) to $2.85 on volume of 32 million shares;

GPT Group (GPT),
+$0.25 (15.15%) to $1.90 on volume of 57.2 million shares;

Mirvac Group (MGR),
+$0.37 (14.62%) to $2.90 on volume of 13.3 million shares; and

The bronze medal for today goes to Industrials
(XNJ),
which climbed 173.5 points (3.9%) to 4619.5 points. The 32 stocks which
make up the index traded a total of 273.28m units; 25 index components
rose, with rising volume amounting to 224.73m shares, while the 4
decliners had volume traded totalling 25.75m units. The major
percentage gainers within the index were

Macquarie Infrastructure Group (MIG),
+$0.31 (15.9%) to $2.26 on volume of 98.8 million shares;

Asciano Group (AIO),
+$0.35 (11.67%) to $3.35 on volume of 5.8 million shares;

Macquarie Airports (MAP),
+$0.18 (8.11%) to $2.40 on volume of 56.2 million shares; and

Transurban Group (TCL),
+$0.44 (8%) to $5.94 on volume of 13.6 million shares.

The worst-performed index for the session was Utilities
(XUJ),
which dipped 108.1 points (2.29%) to 4607.7 points. The 10 stocks which
make up the index traded a total of 79.02m units; The 4 decliners had
volume traded totalling 7.9m units, and 4 index components rose, with
rising volume amounting to 67.56m shares, The major percentage
decliners within the index were

AGL Energy (AGK),
-$1 (7.08%) to $13.13 on volume of 3.2 million shares;

Duet Group (DUE),
-$0.06 (2.2%) to $2.67 on volume of 1.7 million shares;

Spark Infrastructure Group (SKI),
-$0.01 (0.31%) to $1.60 on volume of 2.3 million shares.

Just missing out on the wooden spoon was Healthcare
(XHJ),
which slid 56.3 points (0.6%) to 9317 points. The 8 stocks which make
up the index traded a total of 13.87m units; The 6 decliners had volume
traded totalling 10.84m units, and volume in the lone rising index
component was 0.4m shares, The major percentage decliners within the
index were

Third-to-last amongst the sector indices was Consumer
Staples (XSJ),
which slid 20.8 points (0.29%) to 7228.1 points. The 12 stocks which
make up the index traded a total of 48.25m units; The 6 decliners had
volume traded totalling 29.17m units, and 6 index components rose, with
rising volume amounting to 19.08m shares, The major percentage
decliners within the index were

Foster's Group (FGL),
-$0.35 (6.11%) to $5.38 on volume of 15.5 million shares;

Lion Nathan (LNN),
-$0.35 (3.88%) to $8.67 on volume of 1.5 million shares;

Woolworths (WOW),
-$0.71 (2.51%) to $27.53 on volume of 3.8 million shares;

Coca-Cola Amatil (CCL),
-$0.22 (2.45%) to $8.76 on volume of 3.7 million shares; and

Metcash (MTS),
-$0.08 (1.86%) to $4.21 on volume of 2.2 million shares.